Monday’s bond market has opened in negative territory following the release of stronger than expected economic news. The stock markets have reacted favorably with the Dow up 40 points and the Nasdaq up 4 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage rates higher by approximately .25 of a discount point.

Both of this morning’s economic reports showed stronger than expected results. The Commerce Department reported this morning that personal income rose 0.8% in March while spending rose 0.6%. Analysts were expecting to see 0.4% increases in both readings. This indicates that consumers had more money to spend and were using it to do so. That is bad news for the bond market and mortgage rates because higher levels of spending raise inflation concerns and lead to lower bond prices and higher mortgage rates.

The second report of the day was the Institute for Supply Management’s (ISM) manufacturing index for April. This is one of the first important economic reports released each month and gives us an indication of manufacturer sentiment. It showed a reading of 57.3, which also exceeded forecasts. It was expected to show a 55.1 reading, meaning that more surveyed manufacturers felt business improved last month than the previous. This is also considered to be negative f or bonds and mortgage rates.

There is no relevant economic news scheduled for release tomorrow. Wednesday’s sole report is March’s Factory Orders data at 10:00AM. This is a fairly important release because it measures manufacturing sector strength. It is similar to last week’s Durable Goods Orders, which showed a significant increase, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a smaller increase than the 1.5% that is expected could push mortgage rates slightly lower, while a larger increase will likely lead to higher rates.

Overall, look for plenty of movement in mortgage rates this week. The single most important report is Friday’s employment numbe rs and they will likely be the key as to whether we see mortgage rates move higher or lower for the week.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.